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Servicers to Receive New Incentives for Expedited Modifications

The Treasury Department has released an update to its Making Home Affordable Program.

The supplemental directive, released Wednesday, provides enhanced incentives to servicers that modify loans quickly rather than letting them linger in delinquency.


Incentives vary based on the number of days a mortgage loan is delinquent before receiving modification.

For loans delinquent 120 days (150 days from last full paid installment date) or fewer, servicers will receive $1,600.

For those between 121 and 210 days delinquent (151 to 240 days from the last full paid installment), servicers will receive $1,200.


For any loans modified after 210 days in delinquency (more than 240 days since the last full paid installment), servicers will be granted $400.

The directive is effective October 1, 2011 and applies to all permanent HAMP modifications with trial period plans effective on or after that date.

Once the new directive is enacted, servicers will no longer receive the $500 incentive for loans modified while a borrower is current in his or her payments.

However, the policy will not affect Servicer Pay-for-Success incentives or any other borrower or investor incentives currently in place.

The new servicer incentives do not apply to any loans owned or guaranteed by Fannie Mae or Freddie Mac, or any loans insured or guaranteed by the Veterans Administration, the Department of Agriculture's Rural Housing Service, or the Federal Housing Administration.

Treasury has mandated that servicers are prohibited from taking additional collection measures in order to procure higher incentives.

MHA-Compliance will be responsible for reviewing loan payment histories to determine when servicers take such actions.

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.

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